Emergent Research

EMERGENT RESEARCH is focused on better understanding the small business sector of the US and global economy.

Authors

The authors are Steve King and Carolyn Ockels. Steve and Carolyn are partners at Emergent Research and Senior Fellows at the Society for New Communications Research. Carolyn is leading the coworking study and Steve is a member of the project team.

Videos

Disclosure Policy

Emergent Research works with corporate, government and non-profit clients. When we reference organizations that have provided us funding in the last year we will note it.
If we mention a product or service that we received for free or other considerations, we will note it.

Assistant Edge

Independent workers

June 23, 2015

If you followed most of last week's news about a ruling by by the California Labor Commission that a Uber driver was an employee and not a contract worker, you'd think the 1099 economy will soon be dead.

But, of course, it won't be.

My first thought was to write a long article listing the reasons. But I decided it would be easier to reference the articles already out there that present a balanced view of this decision.

A legal decision that could instantly cripple Uber would be years off and would likely only apply to part of its operations — and in the meantime, Uber would have time to lobby for new regulations or tweak its business model to stay afloat, legal experts say.

For its part, Uber seems set to fight. Its loss in California only came to light this week when it filed its intention to appeal the ruling. And Mr King believes that, with relatively minor changes to the way it handles drivers, it could reduce the risk of being seen as an employer.

"These costs can be allocated across all parties involved in the work arrangement, from the employer to the worker to the consumer," said Gene Zaino, CEO of MBO Partners, a management services company for independent professionals. "For Uber, it does not mean that its business model is invalid. It just needs a good system to allocate these costs accordingly, apply a surcharge to passengers and remit the taxes. It certainly is a change, but these are all solvable issues."

Uber Finalizing $2 Billion Line of Credit from the Wall Street Journal shows that despite all the negative press, Uber can still raise money. They were looking for a 1$ billion line of credit but moved it to $2 billion because so many banks wanted in.

While this ruling will not kill Uber or the 1099 economy, it will increase the pressure on regulators and elected officials to clarify America's antiquated and byzantine methods for classifying workers.

... while while litigation about whether on-demand workers are independent contractors or employees, this question is too important to leave to the courts alone. As policymakers, we should begin discussing whether our 20th-century definitions work in a 21st-century economy.

.. the danger is that we will use old classifications, like W-2 and 1099, to solve problems that are unique to this new landscape, laying groundwork for polarization and years-long legal battles. More importantly, we may miss a once-in-a-century opportunity to address long-standing inequities and build a labor economy for the future that is fair, creative and suited to the tasks of the 21st century.

We expect to see legislators at both the Federal and state levels to start to move on creating new laws around workforce classification.

A nonemployer business is one that has no paid employees, has annual business receipts of $1,000 or more ($1 or more in the Construction industry), and is subject to federal income taxes.

Nonemployer businesses include a mix of solopreneurs, freelancers, passive businesses, hobby businesses and even corporations. Many have little or no activity, but others can be quite large. For example, more than 30,000 nonemployers generated more than $1 million in revenue.

Overall nonemployer businesses generated about $1.1 trillion in revenue in 2013, with the average nonemployer pulling in about $48,000.

The growth of nonemployer businesses is another clear sign that the number of independent workers and/or solopreneurs continues to increase.

The U.S. Census chart below shows the number of nonemployers by industry.

June 02, 2015

According to a recently released report by the U.S. Government Accountability Office (GAO), 40% of the U.S. workforce is contingent, up from 30% in 2005.

The GAO's definition of contingent covers the broad category of workers who aren't full-time, permanent employees. The GAO includes the following in their definition:

Agency temps: (1.3%)

On-call workers (people called to work when needed (3.5%))

Contract company workers (3.0%)

Independent contractors who provide a product or service and find their own customers (12.9%)

Self-employed workers such as shop and restaurant owners, etc. (3.3%)

Standard part-time workers (16.2%)

Most interesting from our perspective is this suggests that 19.2% of the workforce is self-employed. I get to this number by adding contract company workers, independent contractors and self-employed from the above list.

The study surveyed around 300 global business leaders to understand the talent challenges large organizations are facing and identify the best practices among leading companies working with external talent.

For me the most interesting section of the study covers how large corporations view contingent talent.

The study chart below shows that corporations see contingent talent as increasing business flexibility and agility as well as allowing them to access hard to find talent.

This fits with our research, which shows that while cost and saving money continues to be a reason corporations use contingent workers, it's no longer the main reason.

April 23, 2015

According to a new report from MBO Partners - Independent Workers and the On-Demand Economy - about 2.7 million American independent workers report using at least one on-demand economy platform or marketplace as a source of work or income.

The study defined the on-demand economy as including:

online product marketplaces provided by firms such as EBay, Amazon and Etsy and others (Craigslist was excluded).

April 14, 2015

We quit using the term "work/life balance" many years ago. It simply doesn't fit the world most of us live in.

Instead, we started using "work/life flexibility". This term fit what we were hearing in our interviews and seeing in our survey results. People consistently tell us they want to be able have some control over where, when and how they work.

But even this doesn't really describe what's going on. What we are increasingly seeing and hearing is the traditional demarcation between work and home is going away. Replacing it is a new normal where work, home and life are much more seamlessly blended.

... work and personal life should be allies and that participation in multiple roles, such as parent, partner, friend, employee, can actually enhance physical and psychological well-being — especially when all of the roles are high quality and managed together.

We clearly see the blending of work and life in our research on coworking spaces and their members. Some spaces, like the creative industry focused Neuehouse, even stress their role of providing spaces that blend social and work activities.

The picture below, from Neuehouse's website, illustrates this.

Alex Hillman, of the coworking space Indie Hall, has long said coworking facilities are in the happiness business - which is another way saying blending work and life. His slideshare presentation How We Measure Success of Our Coworking Space contains much information supporting this point of view.

March 02, 2015

The Great Decoupling is a term some economists use to describe the economic decoupling of productivity, wages, jobs and GDP growth.

These 4 factors used to move more or less in unison. But as the chart below shows, starting around 2000 the growth in labor productivity "decoupled" from job growth.

But the decoupling is even broader. As the hard-to-read (sorry) chart below shows, labor productivity and GDP growth has also decoupled from median household income (it's the bottom line starting about 1990).

In other words, a growing economy and increases in labor productivity are no longer leading to as many new jobs or as much wage growth as in the past.